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Forget Tech: The Hot IPO Is ... the Postal Service?

10/11/2013 10:40AM

A hot IPO involves a company responsible for handling millions of messages a day, leading to intense investor demand on its first day of trading. A tech startup? No. Try the Royal Mail service, Paul Hannon reports on MoneyBeat. Photo: AP.

This transcript has been automatically generated and may not be 100% accurate.

... ay ay ay ay ay mm mm ... does this sound familiar today's hot IPO involves the company responsible for handling millions of messages a day ... there was intense investor demand on its first day of trading and now put some questions about what it's really worth ... are we really talk about its footer like startup ... absolutely not trying the Royal mail service was IPO in London this morning caused outages As investors clamored for shares ... Paul Hannon joins us now from our bureau in London ... to discuss whether the U K government undervalued the postal service ... all thanks so much for joining us ... the morning ... so give us a little rundown him what exactly happened with this IPO ... well what happened is ... shares rose very very rapidly this morning to a ... high of four two percent of those the IPO price ... but come off a little bit since then there are about fifty percent of now ... but does raise the question of whether the government oral or rather the taxpayer got a fair deal I'm ... some people are saying they could've made as much ... as billion pounds in additional revenue if they got a ride ... focus with a lot of issues going on here with politics Live Markets Minn trading list is unwrapping right on outages I mean it's also exactly ... to soar to capture that the scene of what happened this morning that this IPO ... well it was ... a bit of a frenzy oh one of the brokers involved in selling the shares the AP to its websites in the crash because it was so much demand coming in ... at the same time ... you know politicians were going on the airwaves other criticizing or defending the deal ... the unions staged a protest outside the London stock Exchange because ... they don't want this thing to be output in private hands that wants to ... it remained with the government ... so was a bit of a circus a little ... circus interesting so what explains the why it was there so much demand for this ... for the Royal mail ... yummy nothing that isn't a Christian I mean it does seem like a very traditional old economies and type of company ways ... you know it difficult ... future ahead having to compete with a lot of ... other private sector companies and of course ... Olivia electronic ways you can communicate ... um so I think you know when there are putting this thing together and that the banks to return to sell the shares have had a tough tiles establishing ... exactly what this kind of thing is worse ... um and you know ... critics of the sales side of the gutter wrong but on the other hand ... um you know if they happened since older that this price is quite possible that a lot of mobile pub investor is ... one of the last of the deal and I'm not would of been regarded as a coin defender is well so ... it's just a very very tough thing to blow off at exactly the right you know exactly the right level ... Greg is in the play McGovern it isn't better to have the stock rise in stock one of the sliced banana facing more criticism than that but I guess one final question I have three was one of the lessons of one of the takeaway is here ... that investors and companies can learn from from this episode today ... I mean what are the lessons that investors here in UK might ... might learn is you know if there's something like this in the future pile in ... and ... maintaining but isn't the right kind of lessons learned ... I think ... the main lesson is that he's untouchable we were just talking about that the tweets ... Andy Cohen dove IPO in this environment mean this isn't the first one that is how to choose ... um it's just very very difficult to establish that you know the right kind of level at which you'll get ... enough demand in there to make sure the price stabilizes after ... Indy Oster market but not so much that you are accused of ... giving something away for ... a price that you know it is um justify veto ... um I don't know in terms the actual way to handle or that there was an all lot of departure from ... the traditional way of doing things you know the banks told to potential shareholders they thought they had a good idea ... of what they are prepared to pay ... it turned out that ... I'm ... well it looks like they go wrong undone by quite a large degree ... all right Paul hadn't thank so much for joining us really appreciate it ... their work ...